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Can Rural Entrepreneurship give a Face-Lift to Developing India?

Anamika Sahu
Monday, June 6, 2011
Anamika Sahu
At the beginning of 20th century Mahatma Gandhi said, "The soul of India lives in its villages," we are in the next century now still the statement stands very true. Until a decade ago the national and multinational companies just focused on cities, but in the last few years this has started changing. More and more entrepreneurs are realizing the potential of the rural market and have started focusing on this.

More than 70 percent of the households in India live in the rural areas, and this is estimated to grow in the near future, which makes it the biggest potential market in the entire world. With increasing income levels, the market potential is going to expand in near future. The penetration of the existing MNCs and entry of the new one's into the rural area pictures the depth of this market in the coming future. Various factors are responsible for this. Rural India is becoming educated, becoming more value conscious than price. “There exists a huge vacuum of demand and supply, which needs to be bridged by the government and the big and small size entrepreneurs by understanding the need of these people and area and customizing the products according to their requirement. We cannot serve them with the available products as it has not been manufactured accordingly,” says V. Vijay Babu, CEO, Vertox, a low cost ATM manufacturer.

The core of the problems in India is surplus agricultural labor and closure of traditional village industries, resulting in unemployment in rural areas and migration of rural youth to the urban areas in search of jobs, thus putting more pressure on the urban infrastructure and amenities. Recent change in the shift of big entrepreneurs from the urban to rural areas can help in preventing this. Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. But, will this influencing entrepreneurship help curtail migration from rural to urban area? Understanding the characteristics that make the people and the market in rural India unique can help corporations to enter this market successfully. A swing in policy orientation is needed and a re-assessment of resource management is required to attain sustainable growth pattern. “We cannot bank upon an inherently brittle international economic system for a very long period of time and definitely not with a great level of surety. It appears to be in the interest of the national economy to pay inward attention and strengthen its traditional base which can provide it with an exclusive support structure for both long term social and economic growth,” says Ramakrishna N.K., CEO and Co-Founder, Rang De, NGO for Micro Finance.

The government can more profitably focus on skill development of its existing population to reap the benefits of its demographic dividend and diverse natural and traditional resources that were medieval India's uniqueness in the world market. The Indian rural market with its vast size and demand base offers a huge opportunity for investment. Rural India has a large consuming class with 41 percent of India's middle-class and 58 percent of the total disposable income. Technological advances such as the internet and e-commerce will aid in better logistics and distribution in these areas. So, entrepreneurs by setting up new small and micro enterprises can leverage the rear large number of products and services in rural areas

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